The end of ownership for fashion products?

McKinsey11 Feb 2019 12:00

Business models capitalizing on preowned, refurbished, or rented products have hit the fashion market. The industry needs to pay attention as these models continue to evolve.

The life span of fashion products is being stretched as preowned, refurbished, repaired, and rental business models continue to evolve. Across many categories consumers have demonstrated an appetite to shift away from traditional ownership to newer ways in which to access products.

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In fashion, the shift to new ownership models is driven by growing consumer desire for variety, sustainability, and affordability, and sources suggest that the resale market, for instance, could be bigger than fast fashion within ten years. In recognition of this consumer shift, start-ups will not be the only players making their mark in these segments—established fashion brands will also accelerate the pace with which they embrace new ownership models to further their relevance to consumers.

In more and more categories, consumers are choosing to rent rather than own goods outright. Think of Spotify supplanting compact-disc sales and downloads, Netflix replacing video stores, and Zipcar standing in for car ownership among many young urbanites. This is a fundamental evolution in consumer behavior, and we expect it will have an impact in the fashion business in the years ahead—as we outline in our latest State of Fashion report, written in partnership with .

Luxury consumers can circumvent the price increases of the Speedy 30 bag, for example, through The RealReal, which was founded in 2011 and, as of May 2018, enjoys a $450 million valuation. It sells luxury brands, in gently used form, via a consignment model. The RealReal’s hook: top fashion brands, up to 90 percent off. It recently raised $115 million in a Series G funding round and plans to expand its brick-and-mortar presence in the United States.

Some players have ventured into refurbishment, taking advantage of its sustainability benefits. Eileen Fisher, through its program “Renew,” takes back gently worn products and either refurbishes them or uses the materials to create new products all together. Patagonia pioneered an in-house repair and resale model by buying back their own products and selling those used items at a discount price. On its website, Patagonia asserts, “The single best thing we can do for the planet is keep our gear in use longer and cut down on consumption.”

About the author(s)

Anita Balchandani is a partner in McKinsey’s London office, where Marco Beltrami is a consultant; Achim Berg is a senior partner in the Frankfurt office, Saskia Hedrich is a senior expert in the Munich office, and Felix Rölkens is an associate partner in the Berlin office. Imran Amed is the founder, editor-in-chief, and CEO of the Business of Fashion.